Against a backdrop of increased regulation on Environmental, Social and Governance (ESG) reporting globally, since mid-2021 the US Securities and Exchange Commission (SEC) has been considering mandating reporting of climate change related risks by companies. A proposal is expected by the end of the year.
However, the US Chamber of Commerce - a powerful cross-sector industry association - is actively advocating against a mandatory approach to ESG disclosures and instead pushing for voluntary, flexible and market-driven reporting, stating on its website that "ESG reporting is developing organically—it does not require rigid regulations". In lobbying on this issue, the Chamber has taken a multi-pronged approach, targeting policymakers, regulators and the wider narrative around ESG disclosure to block policy action.
The position of the US Chamber appears to be highly misaligned with the majority of its own finance sector membership, including BlackRock, Prudential Financial and Citigroup, with BlackRock CEO Larry Fink arguing that "A consistent set of reporting standards will promote access to consistent, high-quality and material public information that will enable both asset owners and asset managers to make more informed decisions about how to achieve durable long-term returns" in his 2021 Letter to Shareholders.
Furthermore, investors globally have strongly supported the need for increased climate and ESG related mandatory reporting, in stark contrast to the Chamber's assertion that voluntary disclosure has been largely sufficient in meeting investor demand. The Investment Company Institute (ICI), the industry association which represents regulated funds globally (totaling $41.5 trillion AUM), was strongly supportive of the need for mandatory disclosure in response to the SEC request for comments, stating that "it is critical for the Commission to implement more uniform reporting standards for companies for the benefit of investors, efficient allocation of capital, and enhanced capital formation."
This disconnect between the Chamber, key members and the wider financial sector on the SEC’s proposed climate disclosure rules again raises the question of how the powerful industry group forms its lobbying stances and who it is representing. While engagement from non-financial corporates on the SEC's proposal has been limited, the Chamber's membership includes numerous companies that are highly negatively engaged on climate policy in general. This includes 12 companies which featured in InfluenceMap's recent list of the 25 most influential companies blocking climate policy.
The Chamber also has numerous non-financial members which are engaging on climate policy more positively, and appear to be misaligned with a number of the Chamber's positions. This also appears to be the case with regard to regulated climate reporting, with a letter to the SEC signed by Chamber members Salesforce, Meta (formerly Facebook), Amazon, Intel and Alphabet appearing broadly supportive of mandatory disclosure, stating they "welcome the SEC’s leadership on climate action and support this important and timely inquiry… Investors need clear, comprehensive, high-quality information on the impacts of climate change for market participants".